Economist Peter Schiff slammed President Donald Trump’s decision to impose a one-year cap on credit card interest rates at 10%, warning that it could lead to a credit crunch for borrowers.
Schiff Slams Trump’s ‘Socialist’ Move
On Sunday, in a post on X, Schiff described Trump’s proposal as being “unconstitutional,” and a form of “socialist price control,” which Trump himself had criticized former Vice President Kamala Harris for proposing on grocery prices while on the campaign trail last year.
Schiff also warned that the move could disrupt consumer lending markets, saying that the proposed cap “will force lenders to cut credit limits and close accounts for higher-risk borrowers.”
Trump called for the cap to be implemented by credit card companies by Jan. 20, 2026, the first anniversary of his second term in office.
The proposal is part of a broader wave of populist measures Trump has rolled out over the past week, beginning with a plan to ban institutional buyers from purchasing single-family homes, followed by a $200 billion initiative aimed at lowering mortgage rates for homeowners.
Concerns Regarding Consumer Risks
Billionaire hedge fund manager and Trump ally Bill Ackman called the proposal a “mistake,” echoing concerns that credit-card companies would cancel millions of accounts if they cannot earn adequate returns, forcing some borrowers to turn to “loan sharks” instead.
Sen. Elizabeth Warren (D-Mass.) slammed Trump’s proposal in a post on X, saying, “Begging credit card companies to play nice is a joke.”
“Trump doesn’t care about affordability. Americans know a fraud when they see one,” while calling out the administration’s efforts to shut down the Consumer Financial Protection Bureau, which helps protect borrowers from scams.
The iShares U.S. Financial Services ETF (NYSE:IYG), which tracks several leading U.S. credit card and financial services companies was unfazed by this announcement. The fund was down 0.21% on Friday, closing at $94.32.
Photo Courtesy: Markus Mainka on Shutterstock.com
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